Cut Tourism VAT

Cut tourism VAT, boost british jobs


Wednesday, 19 April 2017

The view from Skegness

Chris Baron, the Resort Director at Butlin’s Skegness, shares his unique insight into why reducing tourism VAT is the most effective way of helping the UK’s coastal communities.

As the Resort Director at Butlin’s Skegness for the past 17 years and having worked for the company for a total of 26 years, I am very aware of the unique challenges the UK’s coastal towns face. My decades of experience living and working in a coastal town has led me to firmly believe that a reduction in VAT on tourist accommodation and attractions is the most effective way of addressing these.

Skegness, a town of 25,000 people on the Lincolnshire coast, used to be a jewel in the British crown but now is one of the most deprived parts of Britain. We have a real issue with demographics, with a third of residents over the age of 60 and this is exacerbated by a loss of talented young people, who leave the town to look for career opportunities elsewhere.

To assist coastal communities, we need to help residents who live in these areas to help themselves. The most effective way of doing this is to reduce barriers to growth and entrepreneurship, creating the conditions for investment and vibrancy in the private sector.

In Skegness, the visitor economy is the cornerstone of our local economy, responsible for at least 22% of employment. Indirectly, the visitor economy is even more crucial, as it supports the wider service industry in sectors such as retail. Fostering the visitor economy is key to the long-term future of the area.

Although a welcome step, government funding initiatives like the Coastal Communities Fund do not provide sustainable funding for local areas. While the scheme has its merits, it is characterised by sporadic, disconnected injections of government funding which are allocated on a project by project basis rather than a nationwide approach. As such, the Coastal Community Fund is never going to create the conditions for a long-term revitalisation of towns like Skegness.

The best way to encourage business investment in coastal and rural areas which are reliant on the visitor economy is to reduce VAT on tourist accommodation and attractions.

VAT levels on accommodation and attractions are high when compared to our European rivals. Higher taxes limit our country’s ability to compete in the highly price-sensitive international market for tourism. Creating a level playing field compared to our rivals will encourage price competition in the sector, making it cheaper to holiday in the UK. This in turn will make domestic tourism more attractive and lead to more international tourists visiting the country, benefitting the economy as a whole and improving the UK’s balance of trade in services.

In fact, according to economists the measure will be revenue positive for HM Treasury. It will also create an additional 121,000 jobs over ten years, a broader VAT base, stronger investment and higher growth which means that the initial loss to The Exchequer is more than offset by the positive effect a reduction in Tourism VAT will have.

In short, a reduction in VAT on accommodation and attractions to 5% will boost tax returns, support the wider UK economy, foster domestic tourism by making it fairer and cheaper for British consumers to holiday in the UK, and provide hospitality and tourism businesses with much needed financial assistance.

But perhaps most importantly, it will empower people at a grassroots level to improve the area in which they live and therefore our society as a whole.

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